[tkaemming]

"I agree with you and generally this is a great way for a startup to save money as well because new grads are cheap."

I'd argue the opposite case — if it's true that a good programmer is at least 5-10x more productive than an average programmer[1], you'd actually save money by paying the experienced programmer significantly more when compared to hiring a team of beginning or average programmers.

[1]: http://en.wikipedia.org/wiki/The_Mythical_Man-Month#The_surg...

[ZachPruckowski]

There's also costs that scale with headcount but not experience. For instance, you've got to get computers and chairs and desks for everyone whether they're a rookie or an expert. Ditto things like healthcare. Sure, the rookies may have cubicles and slightly worse plans, but those costs aren't going to be 1/5 or 1/10 as expensive. And while the good programmers probably need less oversight than average, support personnel costs (internal IT, HR, recruitment, whatever) still scale with headcount.

[physcab]

True. But you're not accounting for the time it takes to hire a programmer that is 5-10x more productive.